Strong growth in activewear unit sales volumes at Gildan
10 Feb '10
4 min read
Sales of socks in the first quarter were essentially flat compared to a year ago in spite of the negative sales impact of the discontinuance of unprofitable sock programs and the elimination of baby apparel and layette programs under licensed brands, which had been included in the Kentucky Derby Hosiery acquisition and did not fit with Gildan's business model. The impact of eliminating these programs was essentially offset by the performance of continuing sock programs, including new mass retailer private label sock brands introduced during fiscal 2009.
Consolidated gross margins in the first quarter were 29.8%, compared to 21.1% in the first quarter of fiscal 2009. The increase in gross margins compared to last year was due to significant gains in manufacturing efficiencies, lower cotton and energy costs and more favourable activewear product-mix, partially offset by lower net selling prices for activewear, as well as the impact of additional inventory provisions.
Selling, general and administrative expenses in the first quarter were U.S. $34.0 million, compared to U.S. $33.5 million in the first quarter of fiscal 2009. The slight increase in SG&A expenses from last year was due to the impact of the higher-valued Canadian dollar on corporate administrative expenses and higher performance-driven variable compensation expenses, partially offset by the non-recurrence of provisions for doubtful receivable accounts recorded in the first quarter of fiscal 2009 as well as lower legal and professional fees. As a percentage of sales, SG&A expenses declined to 15.4%, compared with 18.2% a year ago.
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